<PAGE>
As filed with the Securities and Exchange Commission on October 15, 1999
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------------
CLARENT CORPORATION
(Exact name of registrant as specified in its charter)
-----------------------------
Delaware 77-0433687
(State of Incorporation) (I.R.S. Employer Identification No.)
700 Chesapeake Drive
Redwood City, CA 94063
(650) 306-7511
(Address of principal executive offices)
1999 Amended and Restated Equity Incentive Plan
1999 Non-Employee Directors' Stock Option Plan
1999 Employee Stock Purchase Plan
_________________
(Full title of plans)
Jerry Shaw-Yau Chang
Chief Executive Officer
700 Chesapeake Drive
Redwood City, CA 94063
(650) 306-7511
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------------------------
Copies to:
Patrick A. Pohlen, Esq.
Cooley Godward llp
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306-2155
(650) 843-5000
----------------------------
<TABLE>
<CAPTION>
======================================================================================================================
CALCULATION OF REGISTRATION FEE
======================================================================================================================
Title of Securities Amount to be Proposed Maximum Offering Proposed Maximum Amount of
to be Registered Registered Price Per Share (1) Aggregate Offering Price (1) Registration Fee
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Stock Options and
Common Stock
par value $.001) 10,112,151 shares $ 3.71 - $ 53.22 $ 146,722,762.71 $ 40,788.93
======================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(h) under the Securities Act of 1933,
as amended. The offering price per share and aggregate offering price are
based upon (a) the weighted average exercise price for shares subject to
outstanding options granted pursuant to registrant's (i) 1999 Amended and
Restated Equity Incentive Plan; (ii) 1999 Non-Employee Directors' Stock
Option Plan; and (iii) 1999 Employee Stock Purchase Plan and (b) the
average of the high and low prices of registrant's Common Stock on October
11, 1999 as reported on the Nasdaq National Market.
The chart below details the calculation of the registration fee:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Aggregate Offering
Securities Number of Shares Offering Price Per Share Price
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Shares issuable pursuant to
outstanding options under the
Amended and Restated 1999 Equity
Incentive Plan 7,906,401 $ 3.71 (1)(a) $ 29,332,747.71
- ---------------------------------------------------------------------------------------------------------------------------
Shares issuable pursuant to the
1999 Amended and Restated Equity
Incentive Plan 1,305,750 $ 53.22 (1)(b) $ 69,492,015
- ---------------------------------------------------------------------------------------------------------------------------
Shares issuable pursuant to
outstanding options granted under
the 1999 Non-Employee Directors'
Stock Option Plan 0 N/A N/A
- ---------------------------------------------------------------------------------------------------------------------------
Shares issuable pursuant to the
1999 Non-Employee Directors' Stock
Option Plan 300,000 $ 53.22 (1)(b) $ 15,966.000
- ---------------------------------------------------------------------------------------------------------------------------
Shares issuable pursuant to
outstanding options granted under
the 1999 Employee Stock Purchase
Plan 0 N/ N/A
- ---------------------------------------------------------------------------------------------------------------------------
Shares issuable pursuant to the
1999 Employee Stock Purchase Plan 600,000 $ 53.22 (1)(b) $ 31,932,000
- ---------------------------------------------------------------------------------------------------------------------------
Proposed Maximum Aggregate Offering
Price 10,112,151 $146,722,762.71
- ---------------------------------------------------------------------------------------------------------------------------
Registration Fee $ 40,788.93
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Approximate date of commencement of proposed sale to the public: as soon as
practical after this registration statement becomes effective.
<PAGE>
Part II
Item 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the registrant with the Securities and
Exchange Commission are incorporated by reference into this registration
statement:
(a) Registrant's prospectus filed pursuant to Rule 424(b) under the
Securities Act of 1933, as amended (the "Securities Act"), on July 1, 1999 (file
No. 333-76051).
(b) The description of the registrant's Common Stock which is contained in
the Registration Statement on Form 8-A filed on June 18, 1999, under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), including any
amendment or report filed for the purpose of updating such description.
All reports and other documents subsequently filed by the registrant
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the
filing of a post-effective amendment which indicates that all securities offered
have been sold or which deregisters all securities then remaining unsold, shall
be deemed to be incorporated by reference herein and to be a part of this
registration statement from the date of the filing of such reports and
documents.
Item 4. DESCRIPTION OF SECURITIES
Not Applicable.
Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
The validity of the shares of Common Stock offered hereby will be passed
upon for the registrant by Cooley Godward LLP, Palo Alto, California. As of the
date of this registration statement, certain attorneys of Cooley Godward own an
aggregate of 6,225 shares of the registrant's Common Stock.
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Section 145 of the Delaware General Corporation Law, the registrant
has broad powers to indemnify its directors and officers against liabilities
they may incur in such capacities, including liabilities under the Securities
Act of 1933, as amended. Registrant's Bylaws require it to indemnify its
directors and executive officers, and permit registrant to indemnify its other
officers, employees and other agents, to the extent permitted by Delaware law.
The Bylaws also require the registrant to advance litigation expenses in the
case of stockholder derivative actions or other actions, against an undertaking
by the indemnified party to repay such advances if it is ultimately determined
that the indemnified party is not entitled to indemnification.
Registrant has entered into indemnity agreements with each of its directors
and certain officers which provide indemnification under certain circumstances
for acts and omissions which may not be covered by any directors' and officers'
liability insurance.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
2
<PAGE>
Item 8. EXHIBITS
Exhibit
Number
4.1* Amended and Restated Certificate of Incorporation of the registrant.
4.2* Bylaws of the Company
4.3* Form of Common Stock Certificate
5.1 Opinion of Cooley Godward LLP
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of Cooley Godward LLP (Included in Exhibit 5.1)
24.1 Power of Attorney (See signature page)
99.1* 1999 Amended and Restated Equity Incentive Plan and Form of Stock Option
Grant Notice and Agreement
99.2 1999 Non-Employee Directors' Stock Option Plan and Form of Nonstatutory
Stock Option
99.3 1999 Employee Stock Purchase Plan and Offering Documents
_____________
* Incorporated by reference from the registrant's Registration Statement on Form
S-1, as amended (file No. 333-76051), initially filed with the Securities and
Exchange Commission on April 9, 1999.
Item 9. UNDERTAKINGS
1. The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement, and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
Provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the issuer pursuant to
section 13 or section 15(d) of the Exchange Act that are incorporated by
reference herein.
3
<PAGE>
(b) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
2. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Exchange Act (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities offered herein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
3. Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Redwood City, State of California, on October 15,
1999.
Clarent Corporation
By: /s/ Jerry Shaw-Yau Chang
---------------------------------------
Jerry Shaw-Yau Chang
Chief Executive Officer,
President and Director
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Jerry Shaw-Yau Chang and Richard J.
Heaps, and each of them, his true and lawful attorney-in-fact, each with the
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this registration statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitutes or substitute, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Jerry Shaw-Yau Chang Chief Executive Officer, President October 15, 1999
- ----------------------------------------------- and Director (Principal Executive
Jerry Shaw-Yau Chang Officer)
/s/ Richard J. Heaps Chief Operating Officer and Chief October 15, 1999
- ----------------------------------------------- Financial Officer
Richard J. Heaps (Principal Financial Officer and
Accounting Officer)
/s/ Michael F. Vargo Chief Technology Officer and Director October 15, 1999
- -----------------------------------------------
Michael F. Vargo
/s/ Wen-Chang Ko Director October 15, 1999
- -----------------------------------------------
Wen Chang Ko
/s/ Syaru Shirley Lin Director October 15, 1999
- -----------------------------------------------
Syaru Shirley Lin
</TABLE>
5
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
4.1* Amended and Restated Certificate of Incorporation of the registrant.
4.2* Bylaws of the Company
4.3* Form of Common Stock Certificate
5.1 Opinion of Cooley Godward LLP
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of Cooley Godward LLP (Included in Exhibit 5.1)
24.1 Power of Attorney (See signature page)
99.1* 1999 Amended and Restated Equity Incentive Plan and Form of Stock Option
Grant Notice and Agreement
99.2 1999 Non-Employee Directors' Stock Option Plan and Form of Nonstatutory
Stock Option
99.3 1999 Employee Stock Purchase Plan and Offering Documents
_____________
* Incorporated by reference from the registrant's Registration Statement on Form
S-1, as amended (file No. 333-76051), initially filed with the Securities and
Exchange Commission on April 9, 1999.
6
<PAGE>
October 15, 1999 Exhibit 5.1
Clarent Corporation
700 Chesapeake Drive
Redwood City, CA 94063
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by Clarent Corporation (the "Company") of a Registration
Statement on Form S-8 (the "Registration Statement") with the Securities and
Exchange Commission covering the offering of up to an aggregate of 10,112,151
shares of the Company's Common Stock, $.001 par value (the "Shares"), with
respect to (i) 9,212,151 of the Shares issuable pursuant to the Company's 1999
Amended and Restated Equity Incentive Plan (the "Incentive Plan"); (ii) 300,000
of the Shares issuable pursuant to the Company's 1999 Non-Employee Directors'
Stock Option Plan (the "Non-Employee Directors' Plan") and (iii) 600,000 of the
Shares issuable pursuant to the Company's 1999 Employee Stock Purchase Plan (the
"Employee Purchase Plan")
In connection with this opinion, we have examined the Registration Statement and
related prospectus, the Company's Certificate of Incorporation, as amended, and
Bylaws, and such other documents, records, certificates, memoranda and other
instruments as we deem necessary as a basis for this opinion. We have assumed
the genuineness and authenticity of all documents submitted to us as originals,
the conformity to originals of all documents submitted to us as copies, and the
due execution and delivery of all documents, where due execution and delivery
are a prerequisite to the effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares, when sold and issued in accordance with the Incentive Plan, the
Non-Employee Directors' Plan, the Employee Purchase Plan, and the Registration
Statement and related prospectus, will be validly issued, fully paid, and
nonassessable (except as to shares issued pursuant to certain deferred payment
arrangements, which will be fully paid and nonassessable when such deferred
payments are made in full).
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
Cooley Godward LLP
By: /s/ Patrick A. Pohlen
---------------------
Patrick A. Pohlen, Esq.
<PAGE>
Exhibit 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to the 1999 Amended and Restated Equity Incentive Plan, 1999
Non-Employee Directors' Stock Option Plan and 1999 Employee Stock Purchase Plan
of Clarent Corporation of our report dated February 12, 1999 (except for the
second paragraph of Note 4 and Note 13, as to which the date is April 8, 1999),
with respect to the consolidated financial statements and schedule of Clarent
Corporation for the year ended December 31, 1998, included in the Registration
Statement (Form S-1 No. 333-76051) and related prospectus of Clarent
Corporation, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Palo Alto, California
October 13, 1999
<PAGE>
EXHIBIT 99.2
CLARENT CORPORATION
1999 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
ADOPTED BY THE BOARD OF DIRECTORS April 8, 1999
APPROVED BY STOCKHOLDERS June 22, 1999
EFFECTIVE DATE: June 30, 1999
1. PURPOSES.
(A) ELIGIBLE OPTION RECIPIENTS. The persons eligible to receive Options are
the Non-Employee Directors of the Company.
(B) AVAILABLE OPTIONS. The purpose of the Plan is to provide a means by
which Non-Employee Directors may be given an opportunity to benefit
from increases in value of the Common Stock through the granting of
Nonstatutory Stock Options.
(C) GENERAL PURPOSE. The Company, by means of the Plan, seeks to retain the
services of its Non-Employee Directors, to secure and retain the
services of new Non-Employee Directors and to provide incentives for
such persons to exert maximum efforts for the success of the Company
and its Affiliates.
2. DEFINITIONS.
(A) "AFFILIATE" means any parent corporation or subsidiary corporation of
the Company, whether now or hereafter existing, as those terms are
defined in Sections 424(e) and (f), respectively, of the Code.
(B) "ANNUAL MEETING" means the annual meeting of the stockholders of the
Company.
(C) "BOARD" means the Board of Directors of the Company.
(D) "CODE" means the Internal Revenue Code of 1986, as amended.
(E) "COMMON STOCK" means the common stock of the Company.
(F) "COMPANY" means Clarent Corporation, a Delaware corporation.
(G) "CONSULTANT" means any person, including an advisor, (i) engaged by the
Company or an Affiliate to render consulting or advisory services and
who is compensated for such services or (ii) who is a member of the
Board of Directors of an Affiliate. However, the term "Consultant"
shall not include either Directors of the Company who are not
compensated by the Company for their services as
<PAGE>
Directors or Directors of the Company who are merely paid a director's
fee by the Company for their services as Directors.
(H) "CONTINUING GRANT" means an Option granted to a Non-Employee Director
who meets the specified criteria pursuant to subsection 6(b) of the
Plan.
(I) "CONTINUOUS SERVICE" means that the Optionholder's service with the
Company or an Affiliate, whether as an Employee, Director or Consultant,
is not interrupted or terminated. The Optionholder's Continuous Service
shall not be deemed to have terminated merely because of a change in the
capacity in which the Optionholder renders service to the Company or an
Affiliate as an Employee, Consultant or Director or a change in the
entity for which the Optionholder renders such service, provided that
there is no interruption or termination of the Optionholder's Continuous
Service. For example, a change in status from a Non-Employee Director of
the Company to a Consultant of an Affiliate or an Employee of the Company
will not constitute an interruption of Continuous Service. The Board or
the chief executive officer of the Company, in that party's sole
discretion, may determine whether Continuous Service shall be considered
interrupted in the case of any leave of absence approved by that party,
including sick leave, military leave or any other personal leave.
(J) "DIRECTOR" means a member of the Board of Directors of the Company.
(K) "DISABILITY" means the inability of a person, in the opinion of a
qualified physician acceptable to the Company, to perform the major
duties of that person's position with the Company or an Affiliate of the
Company because of the sickness or injury of the person.
(L) "EMPLOYEE" means any person employed by the Company or an Affiliate.
Mere service as a Director or payment of a director's fee by the Company
or an Affiliate shall not be sufficient to constitute "employment" by the
Company or an Affiliate.
(M) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
(N) "FAIR MARKET VALUE" means, as of any date, the value of the Common Stock
determined as follows:
(I) If the Common Stock is listed on any established stock exchange or
traded on the NASDAQ National Market System or the NASDAQ SmallCap
Market, the Fair Market Value of a share of Common Stock shall be
the closing sales price for such stock (or the closing bid, if no
sales were reported) as quoted on such exchange or market (or the
exchange or market with the greatest volume of trading in the Common
Stock) on the last market trading day prior to the day of
determination, as reported in THE WALL STREET JOURNAL or such other
source as the Board deems reliable.
2.
<PAGE>
(II) In the absence of such markets for the Common Stock, the Fair
Market Value shall be determined in good faith by the Board.
(O) "INITIAL GRANT" means an Option granted to a Non-Employee Director who
meets the specified criteria pursuant to subsection 6(a) of the Plan.
(P) "IPO DATE" means the effective date of the initial public offering of
the Common Stock.
(Q) "NON-EMPLOYEE DIRECTOR" means a Director who is neither employed by
the Company or an Affiliate nor a representative of a five percent
(5%) or greater stockholder.
(R) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code
and the regulations promulgated thereunder.
(S) "OFFICER" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(T) "OPTION" means a Nonstatutory Stock Option granted pursuant to the
Plan.
(U) "OPTION AGREEMENT" means a written agreement between the Company and an
Optionholder evidencing the terms and conditions of an individual
Option grant. Each Option Agreement shall be subject to the terms and
conditions of the Plan.
(V) "OPTIONHOLDER" means a person to whom an Option is granted pursuant to
the Plan or, if applicable, such other person who holds an outstanding
Option.
(W) "PLAN" means this Clarent Corporation 1999 Non-Employee Directors'
Stock Option Plan.
(X) "RULE 16B-3" means Rule 16b-3 promulgated under the Exchange Act or any
successor to Rule 16b-3, as in effect from time to time.
(Y) "SECURITIES ACT" means the Securities Act of 1933, as amended.
3. ADMINISTRATION.
(A) ADMINISTRATION BY BOARD. The Board shall administer the Plan unless and
until the Board delegates administration to a committee.
(B) POWERS OF BOARD. The Board shall have the power, subject to, and within
the limitations of, the express provisions of the Plan:
3.
<PAGE>
(I) To determine the provisions of each Option to the extent not
specified in the Plan.
(II) To construe and interpret the Plan and Options granted under
it, and to establish, amend and revoke rules and regulations
for its administration. The Board, in the exercise of this
power, may correct any defect, omission or inconsistency in
the Plan or in any Option Agreement, in a manner and to the
extent it shall deem necessary or expedient to make the Plan
fully effective.
(III) To amend the Plan or an Option as provided in Section 12.
(IV) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best
interests of the Company which are not in conflict with the
provisions of the Plan.
4. SHARES SUBJECT TO THE PLAN.
(A) SHARE RESERVE. Subject to the provisions of Section 11 relating to
adjustments upon changes in stock, the stock that may be issued
pursuant to Options shall not exceed in the aggregate One Hundred
Fifty Thousand (150,000) shares of Common Stock.
(B) REVERSION OF SHARES TO THE SHARE RESERVE. If any Option shall for
any reason expire or otherwise terminate, in whole or in part,
without having been exercised in full, the stock not acquired under
such Option shall revert to and again become available for issuance
under the Plan.
(C) SOURCE OF SHARES. The stock subject to the Plan may be unissued
shares or reacquired shares, bought on the market or otherwise.
5. ELIGIBILITY.
Nondiscretionary Options as set forth in section 6 shall be granted under
the Plan to all Non-Employee Directors.
6. NON-DISCRETIONARY GRANTS.
(A) INITIAL GRANTS. Without any further action of the Board, each Non-
Employee Director shall be granted the following Options:
4.
<PAGE>
(i) After the IPO Date, each person who is elected or appointed for
the first time to be a Non-Employee Director automatically
shall, upon the date of his or her initial election or
appointment to be a Non-Employee Director by the Board or
stockholders of the Company, be granted an Initial Grant to
purchase Two Thousand Five Hundred (2,500) shares of Common
Stock on the terms and conditions set forth herein.
(b) CONTINUING GRANTS. Beginning with the third regular meeting of the
Board subsequent to his/her receipt of the Initial Grant ( or
beginning with the third regular meeting of the Board subsequent to
the IPO date with respect to each Non-Employee Director who was first
elected or appointed to the Board on or before the IPO date), each
person who continues to be a Non-Employee Director shall (during
his/her term as a Non-Employee Director) automatically be granted a
Continuing Grant to purchase One Thousand (1,000) shares of Common
Stock upon each regular meeting of the Board, on the terms and
conditions set forth herein.
7. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as required by the Plan. Each Option shall contain such additional
terms and conditions, not inconsistent with the Plan, as the Board shall deem
appropriate. Each Option shall include (through incorporation of provisions
hereof by reference in the Option or otherwise) the substance of each of the
following provisions:
(A) TERM. No Option shall be exercisable after the expiration of ten (10)
years from the date it was granted.
(B) EXERCISE PRICE. The exercise price of each Option shall be one
hundred percent (100%) of the Fair Market Value of the stock subject
to the Option on the date the Option is granted. Notwithstanding the
foregoing, an Option may be granted with an exercise price lower than
that set forth in the preceding sentence if such Option is granted
pursuant to an assumption or substitution for another option in a
manner satisfying the provisions of Section 424(a) of the Code.
(C) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option may be paid, to the extent permitted by applicable statutes
and regulations, in any combination of (i) cash or check, (ii)
delivery to the Company of other Common Stock, (iii) deferred
payment, (iv) pursuant to a Regulation T Program if the Shares are
publicly traded or (v) any other form of legal consideration that may
be acceptable to the Board and provided in the Option Agreement;
provided, however, that at any time that the Company is incorporated
in Delaware, payment of the Common Stock's "par value," as defined in
the Delaware General Corporation Law, shall not be made by deferred
payment.
In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be interest
under the deferred payment arrangement.
5.
<PAGE>
(D) TRANSFERABILITY. An Option shall not be transferable other than to
"family members" as defined by Rule 701 of the Securities Act of 1933, as
amended, and by will or by the laws of descent and distribution, and
shall be exercisable during the lifetime of the Optionholder only by the
Optionholder or such "family members" who are also transferees.
Notwithstanding the foregoing, the Optionholder may, by delivering
written notice to the Company, in a form satisfactory to the Company,
designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the Option.
(E) VESTING GENERALLY. Options shall vest and become exercisable immediately
upon grant.
(F) TERMINATION OF CONTINUOUS SERVICE. In the event an Optionholder's
Continuous Service terminates (other than upon the Optionholder's death
or Disability), the Optionholder may exercise his or her Option (to the
extent that the Optionholder was entitled to exercise it as of the date
of termination) but only within such period of time ending on the earlier
of (i) the date twelve (12) months following the termination of the
Optionholder's Continuous Service, or (ii) the expiration of the term of
the Option as set forth in the Option Agreement. If, after termination,
the Optionholder does not exercise his or her Option within the time
specified in the Option Agreement, the Option shall terminate. For
purposes of this Section 7(f), the limitations upon exercise discussed
herein shall also apply to permitted transferees under Section 7(d).
(G) EXTENSION OF TERMINATION DATE. If the exercise of the Option following
the termination of the Optionholder's Continuous Service (other than upon
the Optionholder's death) would be prohibited at any time solely because
the issuance of shares would violate the registration requirements under
the Securities Act, then the Option shall terminate on the earlier of (i)
the expiration of the term of the Option set forth in subsection 7(a) or
(ii) the expiration of a period of three (3) months after the termination
of the Optionholder's Continuous Service during which the exercise of the
Option would not be in violation of such registration requirements.
(H) DISABILITY OF OPTIONHOLDER. In the event an Optionholder's Continuous
Service terminates as a result of the Optionholder's Disability, the
Optionholder may exercise his or her Option (to the extent that the
Optionholder was entitled to exercise it as of the date of termination),
but only within such period of time ending on the earlier of (i) the date
twelve (12) months following such termination or (ii) the expiration of
the term of the Option as set forth in the Option Agreement. If, after
termination, the Optionholder does not exercise his or her Option within
the time specified herein, the Option shall terminate. For purposes of
this Section 7(h), the limitations upon exercise discussed herein shall
also apply to permitted transferees under Section 7(d).
6.
<PAGE>
(I) DEATH OF OPTIONHOLDER. In the event (i) an Optionholder's Continuous
Service terminates as a result of the Optionholder's death or (ii)
the Optionholder dies within the three-month period after the
termination of the Optionholder's Continuous Service for a reason
other than death, then the Option may be exercised (to the extent
the Optionholder was entitled to exercise the Option as of the date
of death) by the Optionholder's estate, by a person who acquired the
right to exercise the Option by bequest or inheritance or by a
person designated to exercise the Option upon the Optionholder's
death, but only within the period ending on the earlier of (1) the
date eighteen (18) months following the date of death or (2) the
expiration of the term of such Option as set forth in the Option
Agreement. If, after death, the Option is not exercised within the
time specified herein, the Option shall terminate.
8. COVENANTS OF THE COMPANY.
(A) AVAILABILITY OF SHARES. During the terms of the Options, the Company
shall keep available at all times the number of shares of Common
Stock required to satisfy such Options.
(B) SECURITIES LAW COMPLIANCE. The Company shall seek to obtain from
each regulatory commission or agency having jurisdiction over the
Plan such authority as may be required to grant Options and to issue
and sell shares of Common Stock upon exercise of the Options;
provided, however, that this undertaking shall not require the
Company to register under the Securities Act the Plan, any Option or
any stock issued or issuable pursuant to any such Option. If, after
reasonable efforts, the Company is unable to obtain from any such
regulatory commission or agency the authority which counsel for the
Company deems necessary for the lawful issuance and sale of stock
under the Plan, the Company shall be relieved from any liability for
failure to issue and sell stock upon exercise of such Options unless
and until such authority is obtained.
9. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Options shall constitute
general funds of the Company.
10. MISCELLANEOUS.
(A) STOCKHOLDER RIGHTS. No Optionholder shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any
shares subject to such Option unless and until such Optionholder has
satisfied all requirements for exercise of the Option pursuant to
its terms.
(B) NO SERVICE RIGHTS. Nothing in the Plan or any instrument executed or
Option granted pursuant thereto shall confer upon any Optionholder
any right to continue to serve the Company as a Non-Employee
Director or shall affect the right of the
7.
<PAGE>
Company or an Affiliate to terminate (i) the employment of an Employee
with or without notice and with or without cause, (ii) the service of a
Consultant pursuant to the terms of such Consultant's agreement with
the Company or an Affiliate or (iii) the service of a Director pursuant
to the Bylaws of the Company or an Affiliate, and any applicable
provisions of the corporate law of the state in which the Company or
the Affiliate is incorporated, as the case may be.
(C) INVESTMENT ASSURANCES. The Company may require an Optionholder, as a
condition of exercising or acquiring stock under any Option, (i) to
give written assurances satisfactory to the Company as to the
Optionholder's knowledge and experience in financial and business
matters and/or to employ a purchaser representative reasonably
satisfactory to the Company who is knowledgeable and experienced in
financial and business matters and that he or she is capable of
evaluating, alone or together with the purchaser representative, the
merits and risks of exercising the Option; and (ii) to give written
assurances satisfactory to the Company stating that the Optionholder is
acquiring the stock subject to the Option for the Optionholder's own
account and not with any present intention of selling or otherwise
distributing the stock. The foregoing requirements, and any assurances
given pursuant to such requirements, shall be inoperative if (iii) the
issuance of the shares upon the exercise or acquisition of stock under
the Option has been registered under a then currently effective
registration statement under the Securities Act or (iv) as to any
particular requirement, a determination is made by counsel for the
Company that such requirement need not be met in the circumstances
under the then applicable securities laws. The Company may, upon advice
of counsel to the Company, place legends on stock certificates issued
under the Plan as such counsel deems necessary or appropriate in order
to comply with applicable securities laws, including, but not limited
to, legends restricting the transfer of the stock.
(D) WITHHOLDING OBLIGATIONS. The Optionholder may satisfy any federal,
state or local tax withholding obligation relating to the exercise or
acquisition of stock under an Option by any of the following means (in
addition to the Company's right to withhold from any compensation paid
to the Optionholder by the Company) or by a combination of such means:
(i) tendering a cash payment; (ii) authorizing the Company to withhold
shares from the shares of the Common Stock otherwise issuable to the
Optionholder as a result of the exercise or acquisition of stock under
the Option; or (iii) delivering to the Company owned and unencumbered
shares of the Common Stock.
11. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) CAPITALIZATION ADJUSTMENTS. If any change is made in the stock subject
to the Plan, or subject to any Option, without the receipt of
consideration by the Company (through merger, consolidation,
reorganization, recapitalization, reincorporation, stock dividend,
dividend in property other than cash, stock split,
8.
<PAGE>
liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or other transaction not involving the receipt of
consideration by the Company), the Plan will be appropriately adjusted in
the class(es) and maximum number of securities subject both to the Plan
pursuant to subsection 4(a) and to the nondiscretionary Options specified
in Section 5, and the outstanding Options will be appropriately adjusted
in the class(es) and number of securities and price per share of stock
subject to such outstanding Options. The Board shall make such
adjustments, and its determination shall be final, binding and
conclusive. (The conversion of any convertible securities of the Company
shall not be treated as a transaction "without receipt of consideration"
by the Company.)
(B) CHANGE IN CONTROL--DISSOLUTION OR LIQUIDATION. In the event of a
dissolution or liquidation of the Company, then all outstanding Options
shall terminate immediately prior to such event.
(C) CHANGE IN CONTROL--ASSET SALE, MERGER, CONSOLIDATION OR REVERSE MERGER.
In the event of (i) a sale of all or substantially all of the assets of
the Company, (ii) a merger or consolidation in which the Company is not
the surviving corporation or (iii) a reverse merger in which the Company
is the surviving corporation but the shares of Common Stock outstanding
immediately preceding the merger are converted by virtue of the merger
into other property, whether in the form of securities, cash or
otherwise, then any surviving corporation or acquiring corporation shall
assume or continue any Options outstanding under the Plan or shall
substitute similar Options (including an option to acquire the same
consideration paid to the stockholders in the transaction described in
this subsection 11(c) for those outstanding under the Plan. In the event
any surviving corporation or acquiring corporation refuses to assume or
continue such Options or to substitute similar Options for those
outstanding under the Plan, then such Options shall terminate if not
exercised prior to such event.
(D) CHANGE IN CONTROL--SECURITIES ACQUISITION. In the event of an
acquisition by any person, entity or group within the meaning of Section
13(d) or 14(d) of the Exchange Act, or any comparable successor
provisions (excluding any employee benefit plan, or related trust,
sponsored or maintained by the Company or an Affiliate) of the beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act, or comparable successor rule) of securities of the Company
representing at least fifty percent (50%) of the combined voting power
entitled to vote in the election of Directors, then with respect to
Options held by Optionholders whose Continuous Service has not
terminated, the vesting of such Options shall be accelerated in full.
9.
<PAGE>
12. AMENDMENT OF THE PLAN AND OPTIONS.
(A) AMENDMENT OF PLAN. The Board at any time, and from time to time, may
amend the Plan. However, except as provided in Section 11 relating
to adjustments upon changes in stock, no amendment shall be
effective unless approved by the stockholders of the Company to the
extent stockholder approval is necessary to satisfy the requirements
of Rule 16b-3 or any NASDAQ or securities exchange listing
requirements.
(B) STOCKHOLDER APPROVAL. The Board may, in its sole discretion, submit
any other amendment to the Plan for stockholder approval.
(C) NO IMPAIRMENT OF RIGHTS. Rights under any Option granted before
amendment of the Plan shall not be impaired by any amendment of the
Plan unless (i) the Company requests the consent of the Optionholder
and (ii) the Optionholder consents in writing.
(D) AMENDMENT OF OPTIONS. The Board at any time, and from time to time,
may amend the terms of any one or more Options; provided, however,
that the rights under any Option shall not be impaired by any such
amendment unless (i) the Company requests the consent of the
Optionholder and (ii) the Optionholder consents in writing.
13. TERMINATION OR SUSPENSION OF THE PLAN.
(A) PLAN TERM. The Board may suspend or terminate the Plan at any time.
No Options may be granted under the Plan while the Plan is suspended
or after it is terminated.
(B) NO IMPAIRMENT OF RIGHTS. Suspension or termination of the Plan shall
not impair rights and obligations under any Option granted while the
Plan is in effect except with the written consent of the
Optionholder.
14. EFFECTIVE DATE OF PLAN.
The Plan shall become effective on the IPO Date, but no Option shall be
exercised unless and until the Plan has been approved by the stockholders of the
Company, which approval shall be within twelve (12) months before or after the
date the Plan is adopted by the Board.
10.
<PAGE>
15. CHOICE OF LAW.
All questions concerning the construction, validity and interpretation of
this Plan shall be governed by the law of the State of California, without
regard to such state's conflict of laws rules.
11.
<PAGE>
CLARENT CORPORATION
NONSTATUTORY STOCK OPTION
(1999 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN)
[NAME] , Optionholder:
CLARENT CORPORATION (the "Company"), pursuant to its 1999 Non-Employee
Directors' Stock Option Plan (the "Plan") has on _____________, 1999 granted to
you, the optionholder named above, an option to purchase shares of the common
stock of the Company ("Common Stock"). This option is not intended to qualify
and will not be treated as an "incentive stock option" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
The grant hereunder is in connection with and in furtherance of the
Company's compensatory benefit plan for participation of the Company's Non-
Employee Directors (as defined in the Plan).
The details of your option are as follows:
1. The total number of shares of Common Stock subject to this option is
___________ (_____). Subject to the limitations contained herein, this option
shall be exercisable in accordance with the Plan.
2. The exercise price of this option is ______________ Dollars ($______)
per share, being the Fair Market Value (as defined in the Plan) of the Common
Stock on the date of grant of this option.
3. (A) This option may be exercised, to the extent specified in the
Plan, by delivering a notice of exercise (in a form designated by the Company)
together with the exercise price to the Secretary of the Company, or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require pursuant
to paragraph 6 of the Plan. This option may not be exercised for any number of
shares which would require the issuance of anything other than whole shares.
(B) By exercising this option you agree that the Company may require
you to enter an arrangement providing for the cash payment by you to the Company
of any tax withholding obligation of the Company arising by reason of the
exercise of this option or the lapse of any substantial risk of forfeiture to
which the shares are subject at the time of exercise.
4. Any notices provided for in this option or the Plan shall be given in
writing and shall be deemed effectively given upon receipt or, in the case of
notices delivered by the Company to you, five (5) days after deposit in the
United States mail, postage prepaid, addressed
<PAGE>
to you at the address specified below or at such other address as you hereafter
designate by written notice to the Company.
5. This option is subject to all the provisions of the Plan, a copy of
which is attached hereto and its provisions are hereby made a part of this
option, including without limitation the provisions of paragraph 6 of the Plan
relating to option provisions, and is further subject to all interpretations,
amendments, rules and regulations which may from time to time be promulgated and
adopted pursuant to the Plan. In the event of any conflict between the
provisions of this option and those of the Plan, the provisions of the Plan
shall control.
Dated the ___ day of__________, ____.
Very truly yours,
CLARENT CORPORATION
By:_____________________________________
Duly authorized on behalf
of the Board of Directors
ATTACHMENTS:
1999 Non-Employee Directors' Stock Option Plan
<PAGE>
The undersigned:
(A) Acknowledges receipt of the foregoing option and the attachments
referenced therein and understands that all rights and liabilities with respect
to this option are set forth in the option and the Plan;
(B) Acknowledges that as of the date of grant of this option, it sets
forth the entire understanding between the undersigned optionholder and the
Company and its affiliates regarding the acquisition of stock in the Company and
supersedes all prior oral and written agreements on that subject with the
exception of (i) the options previously granted and delivered to the undersigned
under stock options plans of the Company, and (ii) the following agreements
only:
NONE___________________________________________
(Initial)
OTHER___________________________________________
___________________________________________
___________________________________________
___________________________________________
OPTIONHOLDER
___________________________________________
Address
___________________________________________
___________________________________________
<PAGE>
EXHIBIT 99.3
CLARENT CORPORATION
1999 EMPLOYEE STOCK PURCHASE PLAN
Adopted April 8, 1999
Approved By Stockholders June 22, 1999
No Termination Date
1. Purpose.
(a) The purpose of the 1999 Employee Stock Purchase Plan (the "Plan") is to
provide a means by which employees of Clarent Corporation, a Delaware
corporation (the "Company"), and its Affiliates, as defined in subparagraph
1(b), which are designated as provided in subparagraph 2(b), may be given an
opportunity to purchase common stock of the Company.
(b) The word "Affiliate" as used in the Plan means any parent corporation
or subsidiary corporation of the Company, as those terms are defined in Sections
424(e) and (f), respectively, of the Internal Revenue Code of 1986, as amended
(the "Code").
(c) The Company, by means of the Plan, seeks to retain the services of its
employees, to secure and retain the services of new employees, and to provide
incentives for such persons to exert maximum efforts for the success of the
Company.
(d) The Company intends that the rights to purchase stock of the Company
granted under the Plan be considered options issued under an "employee stock
purchase plan" as that term is defined in Section 423(b) of the Code
2. Administration.
(a) The Plan shall be administered by the Board of Directors (the "Board")
of the Company unless and until the Board delegates administration to a
Committee, as provided in subparagraph 2(c). Whether or not the Board has
delegated administration, the Board shall have the final power to determine all
questions of policy and expediency that may arise in the administration of the
Plan.
(b) The Board shall have the power, subject to, and within the limitations
of, the express provisions of the Plan:
(i) To determine when and how rights to purchase stock of the
Company shall be granted and the provisions of each offering of such rights
(which need not be identical).
(ii) To designate from time to time which Affiliates of the Company
shall be eligible to participate in the Plan.
(iii) To construe and interpret the Plan and rights granted under it,
and to establish, amend and revoke rules and regulations for its administration.
The Board, in the
1.
<PAGE>
exercise of this power, may correct any defect, omission or inconsistency in the
Plan, in a manner and to the extent it shall deem necessary or expedient to make
the Plan fully effective.
(iv) To amend the Plan as provided in paragraph 13.
(v) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company and its Affiliates and to carry out the intent that the Plan be treated
as an "employee stock purchase plan" within the meaning of Section 423 of the
Code.
(c) The Board may delegate administration of the Plan to a Committee
composed of not fewer than two (2) members of the Board (the "Committee")
constituted in accordance with the requirements of Rule 16b-3 ("Rule 16b-3")
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.
3. Shares Subject to the Plan.
(a) Subject to the provisions of paragraph 12 relating to adjustments upon
changes in stock, the stock that may be sold pursuant to rights granted under
the Plan shall not exceed in the aggregate Three Hundred Thousand (300,000)
shares of the Company's common stock (the "Common Stock"). If any right granted
under the Plan shall for any reason terminate without having been exercised, the
Common Stock not purchased under such right shall again become available for the
Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
4. Grant of Rights; Offering.
(a) The Board or the Committee may from time to time grant or provide for
the grant of rights to purchase Common Stock of the Company under the Plan to
eligible employees (an "Offering") on a date or dates (the "Offering Date(s)")
selected by the Board or the Committee. Each Offering shall be in such form and
shall contain such terms and conditions as the Board or the Committee shall deem
appropriate, which shall comply with the requirements of Section 423(b)(5) of
the Code that all employees granted rights to purchase stock under the Plan
shall have the same rights and privileges. The terms and conditions of an
Offering shall be incorporated by reference into the Plan and treated as part of
the Plan. The provisions of separate Offerings need not be identical, but each
Offering shall include (through incorporation of the provisions of this Plan by
reference in the document comprising the Offering or otherwise) the period
during which the Offering shall be effective, which period shall not exceed
twenty-seven (27) months beginning with the Offering Date, and the substance of
the provisions contained in paragraphs 5 through 8, inclusive.
2.
<PAGE>
(b) If an employee has more than one right outstanding under the Plan,
unless he or she otherwise indicates in agreements or notices delivered
hereunder: (1) each agreement or notice delivered by that employee will be
deemed to apply to all of his or her rights under the Plan, and (2) a right with
a lower exercise price (or an earlier-granted right, if two rights have
identical exercise prices), will be exercised to the fullest possible extent
before a right with a higher exercise price (or a later-granted right, if two
rights have identical exercise prices) will be exercised.
5. Eligibility.
(a) Rights may be granted only to employees of the Company or, as the Board
or the Committee may designate as provided in subparagraph 2(b), to employees of
any Affiliate of the Company. Except as provided in subparagraph 5(b), an
employee of the Company or any Affiliate shall not be eligible to be granted
rights under the Plan, unless, on the Offering Date, such employee has been in
the employ of the Company or any Affiliate for such continuous period preceding
such grant as the Board or the Committee may require, but in no event shall the
required period of continuous employment be equal to or greater than two (2)
years. In addition, unless otherwise determined by the Board or the Committee
and set forth in the terms of the applicable Offering, no employee of the
Company or any Affiliate shall be eligible to be granted rights under the Plan,
unless, on the Offering Date, such employee's customary employment with the
Company or such Affiliate is for at least twenty (20) hours per week and at
least five (5) months per calendar year.
(b) The Board or the Committee may provide that each person who, during the
course of an Offering, first becomes an eligible employee of the Company or
designated Affiliate will, on a date or dates specified in the Offering which
coincides with the day on which such person becomes an eligible employee or
occurs thereafter, receive a right under that Offering, which right shall
thereafter be deemed to be a part of that Offering. Such right shall have the
same characteristics as any rights originally granted under that Offering, as
described herein, except that:
(i) the date on which such right is granted shall be the "Offering
Date" of such right for all purposes, including determination of the exercise
price of such right;
(ii) the period of the Offering with respect to such right shall
begin on its Offering Date and end coincident with the end of such Offering; and
(iii) the Board or the Committee may provide that if such person first
becomes an eligible employee within a specified period of time before the end of
the Offering, he or she will not receive any right under that Offering.
(c) No employee shall be eligible for the grant of any rights under the
Plan if, immediately after any such rights are granted, such employee owns stock
possessing five percent (5%) or more of the total combined voting power or value
of all classes of stock of the Company or of any Affiliate. For purposes of this
subparagraph 5(c), the rules of Section 424(d) of the Code shall apply in
determining the stock ownership of any employee, and stock which such
3.
<PAGE>
employee may purchase under all outstanding rights and options shall be treated
as stock owned by such employee.
(d) An eligible employee may be granted rights under the Plan only if such
rights, together with any other rights granted under "employee stock purchase
plans" of the Company and any Affiliates, as specified by Section 423(b)(8) of
the Code, do not permit such employee's rights to purchase stock of the Company
or any Affiliate to accrue at a rate which exceeds twenty five thousand dollars
($25,000) of the fair market value of such stock (determined at the time such
rights are granted) for each calendar year in which such rights are outstanding
at any time.
(e) Officers of the Company and any designated Affiliate shall be eligible
to participate in Offerings under the Plan, provided, however, that the Board
may provide in an Offering that certain employees who are highly compensated
employees within the meaning of Section 423(b)(4)(D) of the Code shall not be
eligible to participate.
6. Rights; Purchase Price.
(a) On each Offering Date, each eligible employee, pursuant to an Offering
made under the Plan, shall be granted the right to purchase up to the number of
shares of Common Stock of the Company purchasable with a percentage designated
by the Board or the Committee not exceeding ten percent (10%) of such employee's
Earnings (as defined by the Board or the Committee in each Offering) during the
period which begins on the Offering Date (or such later date as the Board or the
Committee determines for a particular Offering) and ends on the date stated in
the Offering, which date shall be no later than the end of the Offering. The
Board or the Committee shall establish one or more dates during an Offering (the
"Purchase Date(s)") on which rights granted under the Plan shall be exercised
and purchases of Common Stock carried out in accordance with such Offering.
(b) In connection with each Offering made under the Plan, the Board or the
Committee may specify a maximum number of shares that may be purchased by any
employee as well as a maximum aggregate number of shares that may be purchased
by all eligible employees pursuant to such Offering. In addition, in connection
with each Offering that contains more than one Purchase Date, the Board or the
Committee may specify a maximum aggregate number of shares which may be
purchased by all eligible employees on any given Purchase Date under the
Offering. If the aggregate purchase of shares upon exercise of rights granted
under the Offering would exceed any such maximum aggregate number, the Board or
the Committee shall make a pro rata allocation of the shares available in as
nearly a uniform manner as shall be practicable and as it shall deem to be
equitable.
(c) The purchase price of stock acquired pursuant to rights granted under
the Plan shall be not less than the lesser of:
(i) an amount equal to eighty-five percent (85%) of the fair market
value of the stock on the Offering Date; or
4.
<PAGE>
(ii) an amount equal to eighty-five percent (85%) of the fair market
value of the stock on the Purchase Date.
"Fair market value" means, as of any date, the value of the Common Stock
determined as follows:
(x) If the Common Stock is listed on any established stock exchange or
traded on the NASDAQ National Market System or the NASDAQ SmallCap Market,
the fair market value of a share of Common Stock shall be the closing sales
price for such stock (or the closing bid, if no sales were reported) as
quoted on such exchange or market (or the exchange or market with the
greatest volume of trading in the Common Stock) on the last market trading
day prior to the day of determination, as reported in The Wall Street
Journal or such other source as the Board deems reliable;
(y) In the absence of such markets for the Common Stock, the fair
market value shall be determined in good faith by the Board; and
(z) Prior to the Listing Date, the value of the Common Stock shall be
determined in a manner consistent with Section 260.140.50 of Title 10 of
the California Code of Regulations.
For the Initial Offering, the fair market value of the Common Stock at the time
when the Offering commences shall be the price per share at which shares of
Common Stock are first sold to the public in the Company's initial public
offering as specified in the final prospectus with respect to that offering.
7. Participation; Withdrawal; Termination.
(a) An eligible employee may become a participant in the Plan pursuant
to an Offering by delivering a participation agreement to the Company within the
time specified in the Offering, in such form as the Company provides. Each such
agreement shall authorize payroll deductions of up to the maximum percentage
specified by the Board or the Committee of such employee's Earnings during the
Offering (as defined by the Board or Committee in each Offering). The payroll
deductions made for each participant shall be credited to an account for such
participant under the Plan and shall be deposited with the general funds of the
Company. A participant may reduce (including to zero) or increase such payroll
deductions, and an eligible employee may begin such payroll deductions, after
the beginning of any Offering only as provided for in the Offering. A
participant may make additional payments into his or her account only if
specifically provided for in the Offering and only if the participant has not
had the maximum amount withheld during the Offering.
(b) At any time during an Offering, a participant may terminate his or her
payroll deductions under the Plan and withdraw from the Offering by delivering
to the Company a notice of withdrawal in such form as the Company provides. Such
withdrawal may be elected at any time prior to the end of the Offering except as
provided by the Board or the Committee in the Offering. Upon such withdrawal
from the Offering by a participant, the Company shall
5.
<PAGE>
distribute to such participant all of his or her accumulated payroll deductions
(reduced to the extent, if any, such deductions have been used to acquire stock
for the participant) under the Offering, without interest, and such
participant's interest in that Offering shall be automatically terminated. A
participant's withdrawal from an Offering will have no effect upon such
participant's eligibility to participate in any other Offerings under the Plan
but such participant will be required to deliver a new participation agreement
in order to participate in subsequent Offerings under the Plan.
(c) Rights granted pursuant to any Offering under the Plan shall terminate
immediately upon cessation of any participating employee's employment with the
Company and any designated Affiliate, for any reason, and the Company shall
distribute to such terminated employee all of his or her accumulated payroll
deductions (reduced to the extent, if any, such deductions have been used to
acquire stock for the terminated employee) under the Offering, without interest.
(d) Rights granted under the Plan shall not be transferable by a
participant otherwise than by will or the laws of descent and distribution, or
by a beneficiary designation as provided in paragraph 14 and, otherwise during
his or her lifetime, shall be exercisable only by the person to whom such rights
are granted.
8. Exercise.
(a) On each Purchase Date specified therefor in the relevant Offering, each
participant's accumulated payroll deductions and other additional payments
specifically provided for in the Offering (without any increase for interest)
will be applied to the purchase of whole shares of stock of the Company, up to
the maximum number of shares permitted pursuant to the terms of the Plan and the
applicable Offering, at the purchase price specified in the Offering. No
fractional shares shall be issued upon the exercise of rights granted under the
Plan. The amount, if any, of accumulated payroll deductions remaining in each
participant's account after the purchase of shares which is less than the amount
required to purchase one share of stock on the final Purchase Date of an
Offering shall be held in each such participant's account for the purchase of
shares under the next Offering under the Plan, unless such participant withdraws
from such next Offering, as provided in subparagraph 7(b), or is no longer
eligible to be granted rights under the Plan, as provided in paragraph 5, in
which case such amount shall be distributed to the participant after such final
Purchase Date, without interest. The amount, if any, of accumulated payroll
deductions remaining in any participant's account, after the purchase of shares
which is equal to the amount required to purchase whole shares of stock on the
final Purchase Date of an Offering, shall be distributed in full to the
participant after such Purchase Date, without interest.
(b) No rights granted under the Plan may be exercised to any extent unless
the shares to be issued upon such exercise under the Plan (including rights
granted thereunder) are covered by an effective registration statement pursuant
to the Securities Act of 1933, as amended (the "Securities Act") and the Plan is
in material compliance with all applicable state, foreign and other securities
and other laws applicable to the Plan. If on a Purchase Date in any Offering
hereunder the Plan is not so registered or in such compliance, no rights granted
under the Plan or
6.
<PAGE>
any Offering shall be exercised on such Purchase Date, and the Purchase Date
shall be delayed until the Plan is subject to such an effective registration
statement and such compliance, except that the Purchase Date shall not be
delayed more than twelve (12) months and the Purchase Date shall in no event be
more than twenty-seven (27) months from the Offering Date. If on the Purchase
Date of any Offering hereunder, as delayed to the maximum extent permissible,
the Plan is not registered and in such compliance, no rights granted under the
Plan or any Offering shall be exercised and all payroll deductions accumulated
during the Offering (reduced to the extent, if any, such deductions have been
used to acquire stock) shall be distributed to the participants, without
interest.
9. Covenants of the Company.
(a) During the terms of the rights granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such rights.
(b) The Company shall seek to obtain from each federal, state, foreign or
other regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to issue and sell shares of stock upon exercise of
the rights granted under the Plan. If, after reasonable efforts, the Company is
unable to obtain from any such regulatory commission or agency the authority
which counsel for the Company deems necessary for the lawful issuance and sale
of stock under the Plan, the Company shall be relieved from any liability for
failure to issue and sell stock upon exercise of such rights unless and until
such authority is obtained.
10. Use of Proceeds from Stock.
Proceeds from the sale of stock pursuant to rights granted under the Plan
shall constitute general funds of the Company.
11. Rights as a Stockholder.
A participant shall not be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to rights granted
under the Plan unless and until the participant's shareholdings acquired upon
exercise of rights under the Plan are recorded in the books of the Company.
12. Adjustments upon Changes in Stock.
(a) If any change is made in the stock subject to the Plan, or subject to
any rights granted under the Plan (through merger, consolidation,
reorganization, recapitalization, reincorporation, stock dividend, dividend in
property other than cash, stock split, liquidating dividend, combination of
shares, exchange of shares, change in corporate structure or other transaction
not involving the receipt of consideration by the Company), the Plan and
outstanding rights will be appropriately adjusted in the class(es) and maximum
number of shares subject to the Plan and the class(es) and number of shares and
price per share of stock subject to outstanding rights. Such adjustments shall
be made by the Board or the Committee, the determination of which shall be
final, binding and conclusive. (The conversion of any
7.
<PAGE>
convertible securities of the Company shall not be treated as a "transaction not
involving the receipt of consideration by the Company.")
(b) In the event of: (1) a dissolution or liquidation of the Company; (2) a
sale of all or substantially all of the Company's assets; (3) a merger or
consolidation in which the Company is not the surviving corporation; (4) a
reverse merger in which the Company is the surviving corporation but the shares
of the Company's Common Stock outstanding immediately preceding the merger are
converted by virtue of the merger into other property, whether in the form of
securities, cash or otherwise; or (5) the acquisition by any person, entity or
group within the meaning of Section 13(d) or 14(d) of the Exchange Act or any
comparable successor provisions (excluding any employee benefit plan, or related
trust, sponsored or maintained by the Company or any Affiliate of the Company)
of the beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act, or comparable successor rule) of securities of the Company
representing at least fifty percent (50%) of the combined voting power entitled
to vote in the election of directors, then, as determined by the Board in its
sole discretion (i) any surviving or acquiring corporation may assume
outstanding rights or substitute similar rights for those under the Plan, (ii)
such rights may continue in full force and effect, or (iii) participants'
accumulated payroll deductions may be used to purchase Common Stock immediately
prior to the transaction described above and the participants' rights under the
ongoing Offering terminated.
13. Amendment of the Plan.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in paragraph 12 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the stockholders of
the Company to the extent stockholder approval is necessary for the Plan to
satisfy the requirements of Section 423 of the Code, Rule 16b-3 or any NASDAQ or
securities exchange listing requirements.
(b) The Board may in its sole discretion submit any other amendment to the
Plan for stockholder approval.
(c) It is expressly contemplated that the Board may amend the Plan in any
respect the Board deems necessary or advisable to provide employees with the
maximum benefits provided or to be provided under the provisions of the Code and
the regulations promulgated thereunder relating to employee stock purchase plans
and/or to bring the Plan and/or rights granted under it into compliance
therewith.
(d) Rights and obligations under any rights granted before amendment of the
Plan shall not be impaired by any amendment of the Plan, except with the consent
of the person to whom such rights were granted, or except as necessary to comply
with any laws or governmental regulations, or except as necessary to ensure that
the Plan and/or rights granted under the Plan comply with the requirements of
Section 423 of the Code.
8.
<PAGE>
14. Designation of Beneficiary.
(a) A participant may file a written designation of a beneficiary who is to
receive any shares and cash, if any, from the participant's account under the
Plan in the event of such participant's death subsequent to the end of an
Offering but prior to delivery to the participant of such shares and cash. In
addition, a participant may file a written designation of a beneficiary who is
to receive any cash from the participant's account under the Plan in the event
of such participant's death during an Offering.
(b) The participant may change such designation of beneficiary at any time
by written notice. In the event of the death of a participant and in the absence
of a beneficiary validly designated under the Plan who is living at the time of
such participant's death, the Company shall deliver such shares and/or cash to
the executor or administrator of the estate of the participant, or if no such
executor or administrator has been appointed (to the knowledge of the Company),
the Company, in its sole discretion, may deliver such shares and/or cash to the
spouse or to any one or more dependents or relatives of the participant, or if
no spouse, dependent or relative is known to the Company, then to such other
person as the Company may designate.
15. Termination or Suspension of the Plan.
(a) The Board in its discretion may suspend or terminate the Plan at any
time. Unless sooner terminated, the Plan shall terminate at the time that all of
the shares subject to the Plan's share reserve, as increased and/or adjusted
from time to time, have been issued under the terms of the Plan. No rights may
be granted under the Plan while the Plan is suspended or after it is terminated.
(b) Rights and obligations under any rights granted while the Plan is in
effect shall not be impaired by suspension or termination of the Plan, except as
expressly provided in the Plan or with the consent of the person to whom such
rights were granted, or except as necessary to comply with any laws or
governmental regulation, or except as necessary to ensure that the Plan and/or
rights granted under the Plan comply with the requirements of Section 423 of the
Code.
16. Effective Date of Plan.
The Plan shall become effective on the same day that the Company's initial
public offering of shares of common stock becomes effective (the "Effective
Date"), but no rights granted under the Plan shall be exercised unless and until
the Plan has been approved by the stockholders of the Company within twelve (12)
months before or after the date the Plan is adopted by the Board or the
Committee, which date may be prior to the Effective Date.
9.
<PAGE>
CLARENT CORPORATION
1999 EMPLOYEE STOCK PURCHASE PLAN OFFERING
Adopted by Board of Directors April 8, 1999
1. Grant; Offering Date.
(a) The Board of Directors of Clarent Corporation, a Delaware corporation
(the "Company"), pursuant to the Company's 1999 Employee Stock Purchase Plan
(the "Plan"), hereby authorizes the grant of rights to purchase shares of the
common stock of the Company ("Common Stock") to all Eligible Employees (an
"Offering"). The first day of an Offering is that Offering's "Offering Date." An
Offering may consist of one (1) or more consecutive "Purchase Periods." The last
day of each Purchase Period during an Offering shall be a "Purchase Date" for
that Offering. If an Offering Date or Purchase Date does not fall on a day
during which the Company's Common Stock is actively traded, then the Offering
Date or Purchase Date, as the case may be, shall be the next subsequent day
during which the Company's Common Stock is actively traded.
(b) Unless otherwise specifically provided herein, an Offering shall begin
on each May 16 and November 16 and shall end six (6) months thereafter on
November 15 or May 15, as the case may be.
(c) The first Offering shall begin on the effective date of the initial
public offering of the Company's Common Stock and end on May 15, 2001, unless
terminated sooner as herein provided (the "Initial Offering"). The Initial
Offering shall be divided into four (4) shorter Purchase Periods of
approximately six (6) months in duration. The first such Purchase Period shall
begin on the Offering Date and shall end on November 15, 1999, the second
Purchase Period shall begin on November 16, 1999, and end on May 15, 2000, the
third Purchase Period shall begin on May 16, 2000, and end on November 15, 2000,
and the fourth Purchase Period shall begin on November 16, 2000, and end on May
15, 2001. Thereafter, an Offering shall begin on May 16 and November 16 of every
year and shall end six (6) months later on the day prior to the next Offering
Date.
(d) Prior to the commencement of any Offering, the Board of Directors (or
the Committee described in subparagraph 2(c) of the Plan, if any) may change any
or all terms of such Offering and any subsequent Offerings. The granting of
rights pursuant to each Offering hereunder shall occur on each respective
Offering Date unless, prior to such date (a) the Board of Directors (or such
Committee) determines that such Offering shall not occur, or (b) no shares
remain available for issuance under the Plan in connection with the Offering.
(e) Notwithstanding any other provisions of an Offering, if the terms of an
Offering as previously established by the Board of Directors of the Company
would, as a result of a change to applicable accounting standards, as a result
of obtaining shareholder approval during such Offering for shares of Common
Stock that would be issued under such Offering (but for the provisions of this
Section 1(e)), or otherwise, generate a charge to earnings, such Offering shall
10.
<PAGE>
terminate effective as of the earlier of (1) the day prior to the date such
change of accounting standards would otherwise first apply to the Offering or
(2) the day prior to the date upon which the maximum aggregate number of shares
of Common Stock available to be purchased by all Eligible Employees under such
Offering (excluding any additional shares of Common Stock made available for
issuance under the Plan by approval of the shareholders of the Company during
the Offering) exceeds the aggregate number of whole shares purchasable by all
Eligible Employees based upon the aggregate of such Employees' payroll
deductions accumulated pursuant to such Offering (the "Offering Termination
Date"), and such Offering Termination Date shall be the final Purchase Date of
such Offering. A subsequent Offering shall commence on such date and on such
terms as shall be provided by the Board of Directors of the Company.
2. Eligible Employees.
All employees of the Company (other than those employees who reside and/or
perform services in countries whose laws make participation impractical) shall
be granted rights to purchase Common Stock under each Offering on the Offering
Date (an "Eligible Employee"). Notwithstanding the foregoing, the following
employees shall not be Eligible Employees or be granted rights under an
Offering: (i) part-time or seasonal employees whose customary employment is less
than 20 hours per week or five months per calendar year or (ii) 5% stockholders
(including ownership through unexercised options) described in subparagraph 5(c)
of the Plan.
3. Rights.
(f) Subject to the limitations contained herein and in the Plan, on each
Offering Date each Eligible Employee shall be granted the right to purchase the
number of shares of Common Stock purchasable with up to ten percent (10%) of
such Eligible Employee's Earnings paid during such Offering; provided, however,
that no employee may purchase Common Stock on a particular Purchase Date that
would result in more than ten percent (10%) of such employee's Earnings in the
period from the Offering Date to such Purchase Date having been applied to
purchase shares under all ongoing Offerings under the Plan and all other Company
plans intended to qualify as "employee stock purchase plans" under Section 423
of the Internal Revenue Code of 1986, as amended (the "Code").
(g) For purposes of this Offering, "Earnings" means the total compensation
paid to an employee, including all salary, wages (including amounts elected to
be deferred by the employee, that would otherwise have been paid, under any cash
or deferred arrangement established by the Company), overtime pay, commissions,
bonuses, and other remuneration paid directly to the employee, but excluding
profit sharing, the cost of employee benefits paid for by the Company, education
or tuition reimbursements, imputed income arising under any Company group
insurance or benefit program, traveling expenses, business and moving expense
reimbursements, income received in connection with stock options, contributions
made by the Company under any employee benefit plan, and similar items of
compensation.
(h) Subject to the limitations contained herein and in the Plan:
11.
<PAGE>
(i) Each employee who was not eligible on the Offering Date for the
Initial Offering but who first becomes an Eligible Employee during the Initial
Offering and prior to November 16, 1999, shall (upon delivery of the designated
enrollment form, no later than November 24, 1999, to the Company or designated
Affiliate) on November 16, 1999, during that Offering, be granted the right to
purchase the number of shares of Common Stock purchasable with up to ten percent
(10%) of such employee's Earnings paid during his or her participation in such
Offering, which right shall be deemed to be a part of the Offering. Such right
shall have the same characteristics as any rights originally granted under the
Offering, except that (i) the date on which such a right is granted shall be the
"Offering Date" of such right for all purposes, including determination of the
exercise price of such right; and (ii) the Offering for such right shall begin
on its Offering Date and end coincident with the end of the ongoing Offering;
(ii) Each employee who was not eligible on the Offering Date for the
Initial Offering but who first becomes an Eligible Employee during the Initial
Offering and prior to May 16, 2000, but after November 15, 1999, shall (upon
delivery of the designated enrollment form, no later than May 24, 2000, to the
Company or designated Affiliate) on May 16, 2000, during that Offering, be
granted the right to purchase the number of shares of Common Stock purchasable
with up to ten percent (10%) of such employee's Earnings paid during his or her
participation in such Offering, which right shall be deemed to be a part of the
Offering. Such right shall have the same characteristics as any rights
originally granted under the Offering, except that (i) the date on which such a
right is granted shall be the "Offering Date" of such right for all purposes,
including determination of the exercise price of such right; and (ii) the
Offering for such right shall begin on its Offering Date and end coincident with
the end of the ongoing Offering; and
(iii) Each employee who was not eligible on the Offering Date for the
Initial Offering but who first becomes an Eligible Employee during the Initial
Offering and prior to November 16, 2000, but after May 15, 2000, shall (upon
delivery of the designated enrollment form, no later than November 24, 2000, to
the Company or designated Affiliate) on November 16, 2000, during that Offering,
be granted the right to purchase the number of shares of Common Stock
purchasable with up to ten percent (10%) of such employee's Earnings paid during
his or her participation in such Offering, which right shall be deemed to be a
part of the Offering. Such right shall have the same characteristics as any
rights originally granted under the Offering, except that (i) the date on which
such a right is granted shall be the "Offering Date" of such right for all
purposes, including determination of the exercise price of such right; and (ii)
the Offering for such right shall begin on its Offering Date and end coincident
with the end of the ongoing Offering.
(i) The maximum number of shares of Common Stock an Eligible Employee may
purchase on any Purchase Date in an Offering shall be such number of shares as
has a fair market value (determined as of the Offering Date for such Offering)
equal to (x) $25,000 multiplied by the number of calendar years in which the
right under such Offering has been outstanding at any time, minus (y) the fair
market value of any other shares of Common Stock (determined as of the relevant
Offering Date with respect to such shares) which, for purposes of the limitation
of Section 423(b)(8) of the Code, are attributed to any of such calendar years
in which the right is
12.
<PAGE>
outstanding. The amount in clause (y) of the previous sentence shall be
determined in accordance with regulations applicable under Section 423(b)(8) of
the Code based on (i) the number of shares previously purchased with respect to
such calendar years pursuant to such Offering or any other Offering under the
Plan, or pursuant to any other Company plans intended to qualify as "employee
stock purchase plans" under Section 423 of the Code, and (ii) the number of
shares subject to other rights outstanding on the Offering Date for such
Offering pursuant to the Plan or any other such Company plan.
(j) The maximum aggregate number of shares available to be purchased by all
Eligible Employees under an Offering shall be the number of shares remaining
available under the Plan on the Offering Date. If the aggregate purchase of
shares of Common Stock upon exercise of rights granted under the Offering would
exceed the maximum aggregate number of shares available, the Board shall make a
pro rata allocation of the shares available in a uniform and equitable manner.
4. Purchase Price.
The purchase price of the Common Stock under the Offering shall be the
lesser of eighty-five percent (85%) of the fair market value of the Common Stock
on the Offering Date or eighty-five percent (85%) of the fair market value of
the Common Stock on the Purchase Date, in each case rounded up to the nearest
whole cent per share. For the Initial Offering, the fair market value of the
Common Stock at the time when the Offering commences shall be the price per
share at which shares of Common Stock are first sold to the public in the
Company's initial public offering as specified in the final prospectus with
respect to that offering.
5. Participation.
(k) An Eligible Employee may elect to participate in an Offering only at
the beginning of the Offering, or such later date specified in subparagraph
3(c). An Eligible Employee shall become a participant in an Offering by
delivering an agreement authorizing payroll deductions. Such deductions must be
in whole dollars or whole percentages, with a maximum percentage of ten percent
(10%) of Earnings. A participant may not make additional payments into his or
her account. The agreement shall be made on such enrollment form as the Company
or a designated Affiliate provides, and must be delivered to the Company or
designated Affiliate no more than seven (7) days after the Offering Date, or
before such later date specified in subparagraph 3(c), to be effective, unless a
later time for filing the enrollment form is set by the Board for all Eligible
Employees with respect to a given Offering Date. For the Initial Offering, the
time for filing an enrollment form and commencing participation for individuals
who are Eligible Employees on the Offering Date for the Initial Offering may be
more than seven (7) days after the Offering Date, as determined by the Company
and communicated to such Eligible Employees. (If the agreement authorizing
payroll deductions is required to be delivered to the Company or designated
Affiliate a specified number of days before the Offering Date to be effective,
then an employee who becomes eligible during the required delivery period shall
not be considered to be an Eligible Employee at the beginning of the Offering
but may elect to participate during the Offering as provided in subparagraph
3(c).)
13.
<PAGE>
(a) A participant may increase or reduce (including to zero) his or her
articipation level effective as of November 16, 1999, May 16, 2000, and November
16, 2000, during the course of the Initial Offering. Any such change in
participation shall be made by delivering a notice to the Company or a
designated Affiliate in such form and at such time as the Company provides. In
addition, a participant may increase or decrease his or her deductions prior to
the beginning of a new Offering to be effective at the beginning of such new
Offering. Except as otherwise specifically provided herein, a participant may
not increase or decrease his or her participation level during the course of an
Offering.
(l) A participant may withdraw from an Offering and receive his or her
accumulated payroll deductions from the Offering (reduced to the extent, if any,
such deductions have been used to acquire Common Stock for the participant on
any prior Purchase Dates), without interest, at any time prior to the end of the
Offering, excluding only each ten (10) day period immediately preceding a
Purchase Date (or such shorter period of time determined by the Company and
communicated to participants) by delivering a withdrawal notice to the Company
in such form as the Company provides. A participant who has withdrawn from an
Offering shall not again participate in such Offering but may participate in
subsequent Offerings under the Plan by submitting a new participation agreement
in accordance with the terms thereof.
(m) A participant shall automatically participate in the Offering
commencing immediately after the final Purchase Date of each previous Offering
in which the participant participates until such time as such participant (i)
ceases to be an Eligible Employee, (ii) withdraws from the Offering or (iii)
terminates employment. A participant who automatically participates in a
subsequent Offering is not required to file any additional enrollment form for
such subsequent Offering in order to continue participation in the Plan.
However, a participant may file an enrollment form with respect to such
subsequent Offering if the participant desires to change any of the
participant's elections contained in the participant's then effective enrollment
form.
6. Purchases.
Subject to the limitations contained herein, on each Purchase Date, each
participant's accumulated payroll deductions (without any increase for interest)
shall be applied to the purchase of whole shares of Common Stock, up to the
maximum number of shares permitted under the Plan and the Offering.
7. Restrictions upon Sale of Shares.
Shares of the Company's Common Stock purchased pursuant to the Initial
Offering may not be sold during the 180-day lock-up period immediately following
the IPO. In addition, Employees who participate in an Offering will be subject
to the Clarent Corporation Insider Trading Policy including the Company's
"window period" guidelines.
14.
<PAGE>
8. Notices and Agreements.
Any notices or agreements provided for in an Offering or the Plan shall be
given in writing, in a form provided by the Company, and unless specifically
provided for in the Plan or this Offering shall be deemed effectively given upon
receipt or, in the case of notices and agreements delivered by the Company via
regular mail, five (5) days after deposit in the United States mail, postage
prepaid.
9. Exercise Contingent on Stockholder Approval.
The rights granted under an Offering are subject to the approval of the
Plan by the stockholders as required for the Plan to obtain treatment as a tax-
qualified employee stock purchase plan under Section 423 of the Code.
10. Offering Subject to Plan.
Each Offering is subject to all the provisions of the Plan, and its
provisions are hereby made a part of the Offering, and is further subject to all
interpretations, amendments, rules and regulations which may from time to time
be promulgated and adopted pursuant to the Plan. In the event of any conflict
between the provisions of an Offering and those of the Plan (including
interpretations, amendments, rules and regulations that may from time to time be
promulgated and adopted pursuant to the Plan), the provisions of the Plan shall
control.
15.
<PAGE>
CLARENT CORPORATION
1999 EMPLOYEE STOCK PURCHASE PLAN OFFERING -- U.S. AFFILIATES
Adopted by Board of Directors April 8, 1999
1. Grant; Offering Date.
(a) The Board of Directors of Clarent Corporation, a Delaware corporation
(the "Company"), pursuant to the Company's 1999 Employee Stock Purchase Plan
(the "Plan"), hereby authorizes the grant of rights to purchase shares of the
common stock of the Company ("Common Stock") to all Eligible Employees (an
"Offering"). The first day of an Offering is that Offering's "Offering Date." An
Offering may consist of one (1) or more consecutive "Purchase Periods." The last
day of each Purchase Period during an Offering shall be a "Purchase Date" for
that Offering. If an Offering Date or Purchase Date does not fall on a day
during which the Company's Common Stock is actively traded, then the Offering
Date or Purchase Date, as the case may be, shall be the next subsequent day
during which the Company's Common Stock is actively traded.
(b) Unless otherwise specifically provided herein, an Offering shall begin
on each May 16 and November 16 and shall end six (6) months thereafter on
November 15 or May 15, as the case may be.
(c) The first Offering shall begin on the effective date of the initial
public offering of the Company's Common Stock and end on May 15, 2001, unless
terminated sooner as herein provided (the "Initial Offering"). The Initial
Offering shall be divided into four (4) shorter Purchase Periods of
approximately six (6) months in duration. The first such Purchase Period shall
begin on the Offering Date and shall end on November 15, 1999, the second
Purchase Period shall begin on November 16, 1999, and end on May 15, 2000, the
third Purchase Period shall begin on May 16, 2000, and end on November 15, 2000,
and the fourth Purchase Period shall begin on November 16, 2000, and end on May
15, 2001. Thereafter, an Offering shall begin on May 16 and November 16 of every
year and shall end six (6) months later on the day prior to the next Offering
Date.
(d) Prior to the commencement of any Offering, the Board of Directors (or
the Committee described in subparagraph 2(c) of the Plan, if any) may change any
or all terms of such Offering and any subsequent Offerings. The granting of
rights pursuant to each Offering hereunder shall occur on each respective
Offering Date unless, prior to such date (a) the Board of Directors (or such
Committee) determines that such Offering shall not occur, or (b) no shares
remain available for issuance under the Plan in connection with the Offering.
(e) Notwithstanding any other provisions of an Offering, if the terms of an
Offering as previously established by the Board of Directors of the Company
would, as a result of a change to applicable accounting standards, as a result
of obtaining shareholder approval during such Offering for shares of Common
Stock that would be issued under such Offering (but for the provisions of this
Section 1(e)), or otherwise, generate a charge to earnings, such Offering shall
16.
<PAGE>
terminate effective as of the earlier of (1) the day prior to the date such
change of accounting standards would otherwise first apply to the Offering or
(2) the day prior to the date upon which the maximum aggregate number of shares
of Common Stock available to be purchased by all Eligible Employees under such
Offering (excluding any additional shares of Common Stock made available for
issuance under the Plan by approval of the shareholders of the Company during
the Offering) exceeds the aggregate number of whole shares purchasable by all
Eligible Employees based upon the aggregate of such Employees' payroll
deductions accumulated pursuant to such Offering (the "Offering Termination
Date"), and such Offering Termination Date shall be the final Purchase Date of
such Offering. A subsequent Offering shall commence on such date and on such
terms as shall be provided by the Board of Directors of the Company.
2. Eligible Employees.
All employees of the Company's Affiliates (as defined in the Plan)
incorporated in the United States (other than those employees who reside and/or
perform services in countries whose laws make participation impractical) shall
be granted rights to purchase Common Stock under each Offering on the Offering
Date (an "Eligible Employee"). Notwithstanding the foregoing, the following
employees shall not be Eligible Employees or be granted rights under an
Offering: (i) part-time or seasonal employees whose customary employment is less
than 20 hours per week or five months per calendar year or (ii) 5% stockholders
(including ownership through unexercised options) described in subparagraph 5(c)
of the Plan.
3. Rights.
(a) Subject to the limitations contained herein and in the Plan, on each
Offering Date each Eligible Employee shall be granted the right to purchase the
number of shares of Common Stock purchasable with up to ten percent (10%) of
such Eligible Employee's Earnings paid during such Offering; provided, however,
that no employee may purchase Common Stock on a particular Purchase Date that
would result in more than ten percent (10%) of such employee's Earnings in the
period from the Offering Date to such Purchase Date having been applied to
purchase shares under all ongoing Offerings under the Plan and all other Company
plans intended to qualify as "employee stock purchase plans" under Section 423
of the Internal Revenue Code of 1986, as amended (the "Code").
(b) For purposes of this Offering, "Earnings" means the total compensation
paid to an employee, including all salary, wages (including amounts elected to
be deferred by the employee, that would otherwise have been paid, under any cash
or deferred arrangement established by the Company), overtime pay, commissions,
bonuses, and other remuneration paid directly to the employee, but excluding
profit sharing, the cost of employee benefits paid for by the Company, education
or tuition reimbursements, imputed income arising under any Company group
insurance or benefit program, traveling expenses, business and moving expense
reimbursements, income received in connection with stock options, contributions
made by the Company under any employee benefit plan, and similar items of
compensation.
(c) Subject to the limitations contained herein and in the Plan:
17.
<PAGE>
(i) Each employee who was not eligible on the Offering Date for the
Initial Offering but who first becomes an Eligible Employee during the Initial
Offering and prior to November 16, 1999, shall (upon delivery of the designated
enrollment form, no later than November 24, 1999, to the Company or designated
Affiliate) on November 16, 1999, during that Offering, be granted the right to
purchase the number of shares of Common Stock purchasable with up to ten percent
(10%) of such employee's Earnings paid during his or her participation in such
Offering, which right shall be deemed to be a part of the Offering. Such right
shall have the same characteristics as any rights originally granted under the
Offering, except that (i) the date on which such a right is granted shall be the
"Offering Date" of such right for all purposes, including determination of the
exercise price of such right; and (ii) the Offering for such right shall begin
on its Offering Date and end coincident with the end of the ongoing Offering;
(ii) Each employee who was not eligible on the Offering Date for the
Initial Offering but who first becomes an Eligible Employee during the Initial
Offering and prior to May 16, 2000, but after November 15, 1999, shall (upon
delivery of the designated enrollment form, no later than May 24, 2000, to the
Company or designated Affiliate) on May 16, 2000, during that Offering, be
granted the right to purchase the number of shares of Common Stock purchasable
with up to ten percent (10%) of such employee's Earnings paid during his or her
participation in such Offering, which right shall be deemed to be a part of the
Offering. Such right shall have the same characteristics as any rights
originally granted under the Offering, except that (i) the date on which such a
right is granted shall be the "Offering Date" of such right for all purposes,
including determination of the exercise price of such right; and (ii) the
Offering for such right shall begin on its Offering Date and end coincident with
the end of the ongoing Offering; and
(iii) Each employee who was not eligible on the Offering Date for the
Initial Offering but who first becomes an Eligible Employee during the Initial
Offering and prior to November 16, 2000, but after May 15, 2000, shall (upon
delivery of the designated enrollment form, no later than November 24, 2000, to
the Company or designated Affiliate) on November 16, 2000, during that Offering,
be granted the right to purchase the number of shares of Common Stock
purchasable with up to ten percent (10%) of such employee's Earnings paid during
his or her participation in such Offering, which right shall be deemed to be a
part of the Offering. Such right shall have the same characteristics as any
rights originally granted under the Offering, except that (i) the date on which
such a right is granted shall be the "Offering Date" of such right for all
purposes, including determination of the exercise price of such right; and (ii)
the Offering for such right shall begin on its Offering Date and end coincident
with the end of the ongoing Offering.
(d) The maximum number of shares of Common Stock an Eligible Employee may
purchase on any Purchase Date in an Offering shall be such number of shares as
has a fair market value (determined as of the Offering Date for such Offering)
equal to (x) $25,000 multiplied by the number of calendar years in which the
right under such Offering has been outstanding at any time, minus (y) the fair
market value of any other shares of Common Stock (determined as of the relevant
Offering Date with respect to such shares) which, for purposes of the limitation
of Section 423(b)(8) of the Code, are attributed to any of such calendar years
in which the right is
18.
<PAGE>
outstanding. The amount in clause (y) of the previous sentence shall be
determined in accordance with regulations applicable under Section 423(b)(8) of
the Code based on (i) the number of shares previously purchased with respect to
such calendar years pursuant to such Offering or any other Offering under the
Plan, or pursuant to any other Company plans intended to qualify as "employee
stock purchase plans" under Section 423 of the Code, and (ii) the number of
shares subject to other rights outstanding on the Offering Date for such
Offering pursuant to the Plan or any other such Company plan.
(e) The maximum aggregate number of shares available to be purchased by all
Eligible Employees under an Offering shall be the number of shares remaining
available under the Plan on the Offering Date. If the aggregate purchase of
shares of Common Stock upon exercise of rights granted under the Offering would
exceed the maximum aggregate number of shares available, the Board shall make a
pro rata allocation of the shares available in a uniform and equitable manner.
4. Purchase Price.
The purchase price of the Common Stock under the Offering shall be the
lesser of eighty-five percent (85%) of the fair market value of the Common Stock
on the Offering Date or eighty-five percent (85%) of the fair market value of
the Common Stock on the Purchase Date, in each case rounded up to the nearest
whole cent per share. For the Initial Offering, the fair market value of the
Common Stock at the time when the Offering commences shall be the price per
share at which shares of Common Stock are first sold to the public in the
Company's initial public offering as specified in the final prospectus with
respect to that offering.
5. Participation.
(a) An Eligible Employee may elect to participate in an Offering only at
the beginning of the Offering, or such later date specified in subparagraph
3(c). An Eligible Employee shall become a participant in an Offering by
delivering an agreement authorizing payroll deductions. Such deductions must be
in whole dollars or whole percentages, with a maximum percentage of ten percent
(10%) of Earnings. A participant may not make additional payments into his or
her account. The agreement shall be made on such enrollment form as the Company
or a designated Affiliate provides, and must be delivered to the Company or
designated Affiliate no more than seven (7) days after the Offering Date, or
before such later date specified in subparagraph 3(c), to be effective, unless a
later time for filing the enrollment form is set by the Board for all Eligible
Employees with respect to a given Offering Date. For the Initial Offering, the
time for filing an enrollment form and commencing participation for individuals
who are Eligible Employees on the Offering Date for the Initial Offering may be
more than seven (7) days after the Offering Date, as determined by the Company
and communicated to such Eligible Employees. (If the agreement authorizing
payroll deductions is required to be delivered to the Company or designated
Affiliate a specified number of days before the Offering Date to be effective,
then an employee who becomes eligible during the required delivery period shall
not be considered to be an Eligible Employee at the beginning of the Offering
but may elect to participate during the Offering as provided in subparagraph
3(c).)
19.
<PAGE>
(b) A participant may increase or reduce (including to zero) his or her
participation level effective as of November 16, 1999, May 16, 2000, and
November 16, 2000, during the course of the Initial Offering. Any such change in
participation shall be made by delivering a notice to the Company or a
designated Affiliate in such form and at such time as the Company provides. In
addition, a participant may increase or decrease his or her deductions prior to
the beginning of a new Offering to be effective at the beginning of such new
Offering. Except as otherwise specifically provided herein, a participant may
not increase or decrease his or her participation level during the course of an
Offering.
(c) A participant may withdraw from an Offering and receive his or her
accumulated payroll deductions from the Offering (reduced to the extent, if any,
such deductions have been used to acquire Common Stock for the participant on
any prior Purchase Dates), without interest, at any time prior to the end of the
Offering, excluding only each ten (10) day period immediately preceding a
Purchase Date (or such shorter period of time determined by the Company and
communicated to participants) by delivering a withdrawal notice to the Company
in such form as the Company provides. A participant who has withdrawn from an
Offering shall not again participate in such Offering but may participate in
subsequent Offerings under the Plan by submitting a new participation agreement
in accordance with the terms thereof.
(d) A participant shall automatically participate in the Offering
commencing immediately after the final Purchase Date of each previous Offering
in which the participant participates until such time as such participant (i)
ceases to be an Eligible Employee, (ii) withdraws from the Offering or (iii)
terminates employment. A participant who automatically participates in a
subsequent Offering is not required to file any additional enrollment form for
such subsequent Offering in order to continue participation in the Plan.
However, a participant may file an enrollment form with respect to such
subsequent Offering if the participant desires to change any of the
participant's elections contained in the participant's then effective enrollment
form.
6. Purchases.
Subject to the limitations contained herein, on each Purchase Date, each
participant's accumulated payroll deductions (without any increase for interest)
shall be applied to the purchase of whole shares of Common Stock, up to the
maximum number of shares permitted under the Plan and the Offering.
7. Restrictions upon Sale of Shares.
Shares of the Company's Common Stock purchased pursuant to the Initial
Offering may not be sold during the 180-day lock-up period immediately following
the IPO. In addition, Employees who participate in an Offering will be subject
to the Clarent Corporation Insider Trading Policy including the Company's
"window period" guidelines.
20.
<PAGE>
8. Notices and Agreements.
Any notices or agreements provided for in an Offering or the Plan shall be
given in writing, in a form provided by the Company, and unless specifically
provided for in the Plan or this Offering shall be deemed effectively given upon
receipt or, in the case of notices and agreements delivered by the Company via
regular mail, five (5) days after deposit in the United States mail, postage
prepaid.
9. Exercise Contingent on Stockholder Approval.
The rights granted under an Offering are subject to the approval of the
Plan by the stockholders as required for the Plan to obtain treatment as a tax-
qualified employee stock purchase plan under Section 423 of the Code.
10. Offering Subject to Plan.
Each Offering is subject to all the provisions of the Plan, and its
provisions are hereby made a part of the Offering, and is further subject to all
interpretations, amendments, rules and regulations which may from time to time
be promulgated and adopted pursuant to the Plan. In the event of any conflict
between the provisions of an Offering and those of the Plan (including
interpretations, amendments, rules and regulations that may from time to time be
promulgated and adopted pursuant to the Plan), the provisions of the Plan shall
control.
21.
<PAGE>
CLARENT CORPORATION
1999 EMPLOYEE STOCK PURCHASE PLAN OFFERING -- FOREIGN AFFILIATES
Adopted by Board of Directors April 8, 1999
1. Grant; Offering Date.
(a) The Board of Directors of Clarent Corporation, a Delaware corporation
(the "Company"), pursuant to the Company's 1999 Employee Stock Purchase Plan
(the "Plan"), hereby authorizes the grant of rights to purchase shares of the
common stock of the Company ("Common Stock") to all Eligible Employees (an
"Offering"). The first day of an Offering is that Offering's "Offering Date." An
Offering may consist of one (1) or more consecutive "Purchase Periods." The last
day of each Purchase Period during an Offering shall be a "Purchase Date" for
that Offering. If an Offering Date or Purchase Date does not fall on a day
during which the Company's Common Stock is actively traded, then the Offering
Date or Purchase Date, as the case may be, shall be the next subsequent day
during which the Company's Common Stock is actively traded.
(b) Unless otherwise specifically provided herein, an Offering shall begin
on each May 16 and November 16 and shall end six (6) months thereafter on
November 15 or May 15, as the case may be.
(c) The first Offering shall begin on the effective date of the initial
public offering of the Company's Common Stock and end on May 15, 2001, unless
terminated sooner as herein provided (the "Initial Offering"). The Initial
Offering shall be divided into four (4) shorter Purchase Periods of
approximately six (6) months in duration. The first such Purchase Period shall
begin on the Offering Date and shall end on November 15, 1999, the second
Purchase Period shall begin on November 16, 1999, and end on May 15, 2000, the
third Purchase Period shall begin on May 16, 2000, and end on November 15, 2000,
and the fourth Purchase Period shall begin on November 16, 2000, and end on May
15, 2001. Thereafter, an Offering shall begin on May 16 and November 16 of every
year and shall end six (6) months later on the day prior to the next Offering
Date.
(d) Prior to the commencement of any Offering, the Board of Directors (or
the Committee described in subparagraph 2(c) of the Plan, if any) may change any
or all terms of such Offering and any subsequent Offerings. The granting of
rights pursuant to each Offering hereunder shall occur on each respective
Offering Date unless, prior to such date (a) the Board of Directors (or such
Committee) determines that such Offering shall not occur, or (b) no shares
remain available for issuance under the Plan in connection with the Offering.
(e) Notwithstanding any other provisions of an Offering, if the terms of an
Offering as previously established by the Board of Directors of the Company
would, as a result of a change to applicable accounting standards, as a result
of obtaining shareholder approval during such Offering for shares of Common
Stock that would be issued under such Offering (but for the provisions of this
Section 1(e)), or otherwise, generate a charge to earnings, such Offering shall
22.
<PAGE>
terminate effective as of the earlier of (1) the day prior to the date such
change of accounting standards would otherwise first apply to the Offering or
(2) the day prior to the date upon which the maximum aggregate number of shares
of Common Stock available to be purchased by all Eligible Employees under such
Offering (excluding any additional shares of Common Stock made available for
issuance under the Plan by approval of the shareholders of the Company during
the Offering) exceeds the aggregate number of whole shares purchasable by all
Eligible Employees based upon the aggregate of such Employees' payroll
deductions accumulated pursuant to such Offering (the "Offering Termination
Date"), and such Offering Termination Date shall be the final Purchase Date of
such Offering. A subsequent Offering shall commence on such date and on such
terms as shall be provided by the Board of Directors of the Company.
2. Eligible Employees.
All employees of the Company's Affiliates (as defined in the Plan)
incorporated outside of the United States (other than in those countries whose
laws make participation impractical) shall be granted rights to purchase Common
Stock under each Offering on the Offering Date (an "Eligible Employee").
Notwithstanding the foregoing, the following employees shall not be Eligible
Employees or be granted rights under an Offering: (i) part-time or seasonal
employees whose customary employment is less than 20 hours per week or five
months per calendar year or (ii) 5% stockholders (including ownership through
unexercised options) described in subparagraph 5(c) of the Plan.
3. Rights.
(a) Subject to the limitations contained herein and in the Plan, on each
Offering Date each Eligible Employee shall be granted the right to purchase the
number of shares of Common Stock purchasable with up to ten percent (10%) of
such Eligible Employee's Earnings paid during such Offering; provided, however,
that no employee may purchase Common Stock on a particular Purchase Date that
would result in more than ten percent (10%) of such employee's Earnings in the
period from the Offering Date to such Purchase Date having been applied to
purchase shares under all ongoing Offerings under the Plan and all other Company
plans intended to qualify as "employee stock purchase plans" under Section 423
of the Internal Revenue Code of 1986, as amended (the "Code").
(b) For purposes of this Offering, "Earnings" means the total compensation
paid to an employee, including all salary, wages (including amounts elected to
be deferred by the employee, that would otherwise have been paid, under any cash
or deferred arrangement established by the Company), overtime pay, commissions,
bonuses, and other remuneration paid directly to the employee, but excluding
profit sharing, the cost of employee benefits paid for by the Company, education
or tuition reimbursements, imputed income arising under any Company group
insurance or benefit program, traveling expenses, business and moving expense
reimbursements, income received in connection with stock options, contributions
made by the Company under any employee benefit plan, and similar items of
compensation.
(c) Subject to the limitations contained herein and in the Plan:
23.
<PAGE>
(i) Each employee who was not eligible on the Offering Date for the
Initial Offering but who first becomes an Eligible Employee during the Initial
Offering and prior to November 16, 1999, shall (upon delivery of the designated
enrollment form, no later than November 24, 1999, to the Company or designated
Affiliate) on November 16, 1999, during that Offering, be granted the right to
purchase the number of shares of Common Stock purchasable with up to ten percent
(10%) of such employee's Earnings paid during his or her participation in such
Offering, which right shall be deemed to be a part of the Offering. Such right
shall have the same characteristics as any rights originally granted under the
Offering, except that (i) the date on which such a right is granted shall be the
"Offering Date" of such right for all purposes, including determination of the
exercise price of such right; and (ii) the Offering for such right shall begin
on its Offering Date and end coincident with the end of the ongoing Offering;
(ii) Each employee who was not eligible on the Offering Date for the
Initial Offering but who first becomes an Eligible Employee during the Initial
Offering and prior to May 16, 2000, but after November 15, 1999, shall (upon
delivery of the designated enrollment form, no later than May 24, 2000, to the
Company or designated Affiliate) on May 16, 2000, during that Offering, be
granted the right to purchase the number of shares of Common Stock purchasable
with up to ten percent (10%) of such employee's Earnings paid during his or her
participation in such Offering, which right shall be deemed to be a part of the
Offering. Such right shall have the same characteristics as any rights
originally granted under the Offering, except that (i) the date on which such a
right is granted shall be the "Offering Date" of such right for all purposes,
including determination of the exercise price of such right; and (ii) the
Offering for such right shall begin on its Offering Date and end coincident with
the end of the ongoing Offering; and
(iii) Each employee who was not eligible on the Offering Date for the
Initial Offering but who first becomes an Eligible Employee during the Initial
Offering and prior to November 16, 2000, but after May 15, 2000, shall (upon
delivery of the designated enrollment form, no later than November 24, 2000, to
the Company or designated Affiliate) on November 16, 2000, during that Offering,
be granted the right to purchase the number of shares of Common Stock
purchasable with up to ten percent (10%) of such employee's Earnings paid during
his or her participation in such Offering, which right shall be deemed to be a
part of the Offering. Such right shall have the same characteristics as any
rights originally granted under the Offering, except that (i) the date on which
such a right is granted shall be the "Offering Date" of such right for all
purposes, including determination of the exercise price of such right; and (ii)
the Offering for such right shall begin on its Offering Date and end coincident
with the end of the ongoing Offering.
(d) The maximum number of shares of Common Stock an Eligible Employee may
purchase on any Purchase Date in an Offering shall be such number of shares as
has a fair market value (determined as of the Offering Date for such Offering)
equal to (x) $25,000 multiplied by the number of calendar years in which the
right under such Offering has been outstanding at any time, minus (y) the fair
market value of any other shares of Common Stock (determined as of the relevant
Offering Date with respect to such shares) which, for purposes of the limitation
of Section 423(b)(8) of the Code, are attributed to any of such calendar years
in which the right is
24.
<PAGE>
outstanding. The amount in clause (y) of the previous sentence shall be
determined in accordance with regulations applicable under Section 423(b)(8) of
the Code based on (i) the number of shares previously purchased with respect to
such calendar years pursuant to such Offering or any other Offering under the
Plan, or pursuant to any other Company plans intended to qualify as "employee
stock purchase plans" under Section 423 of the Code, and (ii) the number of
shares subject to other rights outstanding on the Offering Date for such
Offering pursuant to the Plan or any other such Company plan.
(e) The maximum aggregate number of shares available to be purchased by all
Eligible Employees under an Offering shall be the number of shares remaining
available under the Plan on the Offering Date. If the aggregate purchase of
shares of Common Stock upon exercise of rights granted under the Offering would
exceed the maximum aggregate number of shares available, the Board shall make a
pro rata allocation of the shares available in a uniform and equitable manner.
4. Purchase Price.
The purchase price of the Common Stock under the Offering shall be the
lesser of eighty-five percent (85%) of the fair market value of the Common Stock
on the Offering Date or eighty-five percent (85%) of the fair market value of
the Common Stock on the Purchase Date, in each case rounded up to the nearest
whole cent per share. For the Initial Offering, the fair market value of the
Common Stock at the time when the Offering commences shall be the price per
share at which shares of Common Stock are first sold to the public in the
Company's initial public offering as specified in the final prospectus with
respect to that offering.
5. Participation.
(a) An Eligible Employee may elect to participate in an Offering only at
the beginning of the Offering, or such later date specified in subparagraph
3(c). An Eligible Employee shall become a participant in an Offering by
delivering an agreement authorizing payroll deductions. Such deductions must be
in whole dollars or whole percentages, with a maximum percentage of ten percent
(10%) of Earnings. A participant may not make additional payments into his or
her account. The agreement shall be made on such enrollment form as the Company
or a designated Affiliate provides, and must be delivered to the Company or
designated Affiliate no more than seven (7) days after the Offering Date, or
before such later date specified in subparagraph 3(c), to be effective, unless a
later time for filing the enrollment form is set by the Board for all Eligible
Employees with respect to a given Offering Date. For the Initial Offering, the
time for filing an enrollment form and commencing participation for individuals
who are Eligible Employees on the Offering Date for the Initial Offering may be
more than seven (7) days after the Offering Date, as determined by the Company
and communicated to such Eligible Employees. (If the agreement authorizing
payroll deductions is required to be delivered to the Company or designated
Affiliate a specified number of days before the Offering Date to be effective,
then an employee who becomes eligible during the required delivery period shall
not be considered to be an Eligible Employee at the beginning of the Offering
but may elect to participate during the Offering as provided in subparagraph
3(c).)
25.
<PAGE>
(b) A participant may increase or reduce (including to zero) his or her
participation level effective as of November 16, 1999, May 16, 2000, and
November 16, 2000, during the course of the Initial Offering. Any such change in
participation shall be made by delivering a notice to the Company or a
designated Affiliate in such form and at such time as the Company provides. In
addition, a participant may increase or decrease his or her deductions prior to
the beginning of a new Offering to be effective at the beginning of such new
Offering. Except as otherwise specifically provided herein, a participant may
not increase or decrease his or her participation level during the course of an
Offering.
(c) A participant may withdraw from an Offering and receive his or her
accumulated payroll deductions from the Offering (reduced to the extent, if any,
such deductions have been used to acquire Common Stock for the participant on
any prior Purchase Dates), without interest, at any time prior to the end of the
Offering, excluding only each ten (10) day period immediately preceding a
Purchase Date (or such shorter period of time determined by the Company and
communicated to participants) by delivering a withdrawal notice to the Company
in such form as the Company provides. A participant who has withdrawn from an
Offering shall not again participate in such Offering but may participate in
subsequent Offerings under the Plan by submitting a new participation agreement
in accordance with the terms thereof.
(d) A participant shall automatically participate in the Offering
commencing immediately after the final Purchase Date of each previous Offering
in which the participant participates until such time as such participant (i)
ceases to be an Eligible Employee, (ii) withdraws from the Offering or (iii)
terminates employment. A participant who automatically participates in a
subsequent Offering is not required to file any additional enrollment form for
such subsequent Offering in order to continue participation in the Plan.
However, a participant may file an enrollment form with respect to such
subsequent Offering if the participant desires to change any of the
participant's elections contained in the participant's then effective enrollment
form.
6. Purchases.
Subject to the limitations contained herein, on each Purchase Date, each
participant's accumulated payroll deductions (without any increase for interest)
shall be applied to the purchase of whole shares of Common Stock, up to the
maximum number of shares permitted under the Plan and the Offering.
7. Restrictions upon Sale of Shares.
Shares of the Company's Common Stock purchased pursuant to the Initial
Offering may not be sold during the 180-day lock-up period immediately following
the IPO. In addition, Employees who participate in an Offering will be subject
to the Clarent Corporation Insider Trading Policy including the Company's
"window period" guidelines.
26.
<PAGE>
8. Notices and Agreements.
Any notices or agreements provided for in an Offering or the Plan shall be
given in writing, in a form provided by the Company, and unless specifically
provided for in the Plan or this Offering shall be deemed effectively given upon
receipt or, in the case of notices and agreements delivered by the Company via
regular mail, five (5) days after deposit in the United States mail, postage
prepaid.
9. Exercise Contingent on Stockholder Approval.
The rights granted under an Offering are subject to the approval of the
Plan by the stockholders as required for the Plan to obtain treatment as a tax-
qualified employee stock purchase plan under Section 423 of the Code.
10. Offering Subject to Plan.
Each Offering is subject to all the provisions of the Plan, and its
provisions are hereby made a part of the Offering, and is further subject to all
interpretations, amendments, rules and regulations which may from time to time
be promulgated and adopted pursuant to the Plan. In the event of any conflict
between the provisions of an Offering and those of the Plan (including
interpretations, amendments, rules and regulations that may from time to time be
promulgated and adopted pursuant to the Plan), the provisions of the Plan shall
control.
27.
